Probate is the general administering of a deceased person’s will or the estate of a deceased person who does not have a will. It is a long court process that can take months or even years. It involves attorneys’ costs and payments to a personal representative who manages your estate as overseen by the courts. This public process diminishes the privacy of a person’s end-of-life asset distributions. Anyone can attend any probate court hearing. This puts all creditors and third parties on notice of the assets available if those third parties have any claims to your money. More importantly, probate prolongs the grieving process for family members having to constantly go to court to have the judge administer the deceased person’s will. Fortunately, there is a way to make asset distributions outside of the probate process.
One way to avoid the probate process is by making beneficiary designations. Assets in a will are distributed to loved ones and named individuals (called “beneficiaries”) upon the decedent’s death. However, beneficiary designations allow the legal title of the property to be transferred to the named individuals while the estate holder is still alive. Once legal title is transferred, the beneficiary obtains the property with certainty. Upon the estate holder’s death, the physical property will then also be transferred. Types of beneficiary designations include life insurance policies and retirement accounts, which are property interests such as IRAs and 401ks.
Another way to avoid the probate process is through “transfer on death” designations. Transfer on death designations, most commonly used for bank accounts, ascertains that specific amounts of checking, savings, or money market balances go to named individuals instead of having the money combined and comingled with other assets in the probate process. It essentially works like a beneficiary designation for your bank accounts
Finally, the best way to avoid probate is to set up a trust. Unlike wills, which are public documents, trusts are private instruments that manage a decedent’s end-of-life distributions just as a court would. Unlike the court probate process, however, a specific trustee is chosen by the decedent, and the asset distributions are established specifically to go to named individuals. Creditors and attorneys’ fees are less of a concern with trusts.
Every person’s situation is very different, and everyone’s preferences are very different. Our firm is well-versed in assisting individuals of different ages, backgrounds, and goals. Our goal is to help our clients obtain the most comfortable end-of-life management possible so that you can live your life without worry today.